Handisoft SuperFund and Instalment Warrants

Acquiring assets through instalment warrants

SuperFund allows you to enter assets that have been acquired using an Instalment Warrant arrangement.

Instalment Warrant arrangements enable SMSF's to acquire an asset through a series of agreed instalment payments. An Instalment Warrant arrangement typically involves an initial upfront payment, and the balance of the purchase price is lent to the SMSF by the issuer of the warrant. The borrowing and the applicable interest are repaid in instalments. The SMSF is usually only required to fund the initial upfront payment.

For more information on this topic please refer to the applicable government legislation.

In HandiSoft SuperFund, we enter both the instalment warrant and the asset at the same time as the two are linked.

Entering the instalment warrant and the associated asset

To illustrate the process the following example will be used:

The SMSF purchased a property for $300,000, and incurred a $1,000 purchase fee, giving a Capital Cost of 301,000. The asset was acquired with an initial payment of $57,500, and an instalment warrant arrangement to mature on 01/03/2027, which included Prepaid Interest of $5,000, a $1,500 Borrowing Fee and a Loan Amount of $250,000.

1. From the Assets menu, click Instalment Warrants.
2. In the "Instalment Warrants" window, click New.
3. In the "Instalments Warrants" window, complete the Details section, selecting the Property option in the Asset Type field, as the SMSF has used the instalment warrant to purchase property, in the example above. Then click on the ellipses next to the Asset Description field to enter the related asset details.
   
   
4. In the "Property" window, complete the relevant details and click Save and Close.
   
   
    
5. Now complete the remainder of the Instalment Warrant details, in the "Instalment Warrant" window, and then click Save and Close.
   
   
6. SuperFund will then generate the journal entry for both the instalment warrant and the asset acquired. Click Post and Close.
   
   
7. The Investment Summary report will reflect both the Physical Asset acquired the Loan amount of the Instalment Warrant arrangement.
   
   

Processing the instalment payments

The instalment payments are processed in the following manner:

1. From the Transaction menu, click Repayments for Loans from Others.
2. In the "Loans from Others - Loan Repayment" window, complete the details, remembering to select the correct Instalment Warrant arrangement, from the ellipses in the Loan field, and then click Save and Close.
   
   
    
3. SuperFund will then generate the following journal entry. Click Post and Close.
   
   
4. The Investment Summary report will be updated accordingly.
   
   

Program and version

SuperFund 2011, Version 2.02 onwards